Who Pays Closing Costs? What Homebuyers Should Know

When it comes to real estate transactions, it’s easy to focus on the initial, upfront expenses. If you’re the buyer, these immediate expenses can include the home’s purchase price and down payment. If you’re the seller, they can involve repairs, renovations, and improvements to get the home ready to be sold.

Before a real estate transaction can be completed, the matter of closing costs needs to be discussed. Salmon Real Estate helps individuals buy and sell homes on Staten Island, New York, and offers listings of various property types in the area. Here, the team explains who usually pays closing costs and what homebuyers need to know when negotiating them.

What Are Closing Costs?

Lenders charge fees in exchange for their services in creating a home loan. Those fees are what are known as closing costs. They cover things such as the home appraisal and searches on the home’s title. The amount that needs to be paid often will depend on the type of loan and where you live.

Closing costs are so named because they are the final step in the transaction process. They are due before the keys can be handed over. Closing costs are paid when the buyer and seller meet with the closing agent, title company, or attorney to disburse the funds and sign the documents to make the sale final.

By law, both the buyer and seller will receive closing documents that provide the details of the transaction at least three business days before closing. These documents will include an itemized list of closing fees for both parties.

Who Is Required to Pay Closing Costs?

When it comes to closing costs, generally, both buyers and sellers are responsible for paying them, although, negotiating power can depend heavily on the current market (see the market snapshot). While both buyers and sellers pay closing costs, the buyer usually is responsible for the bulk of the closing fees in a real estate sale. In most cases, closing costs for sellers are deducted directly from the home sale proceeds, while buyers typically pay their portion out-of-pocket.

To help minimize the financial burden of closing costs, homebuyers can negotiate with a seller to help cover costs. This is called seller concessions, and it can be extremely beneficial to buyers who believe they will have difficulties coming up with the money needed to close the deal. However, there are limits on the amount that sellers can offer toward closing costs, as they are only allowed to contribute up to a certain percentage of the mortgage value.

A breakdown of the fees in the typical closing costs for buyers includes:

• Attorney fees
• Loan organization fee
• Appraisal fees
• Processing fee or underwriting fee
• Credit report fees
• Home inspection fees
• Escrow and signing
• Recording fees
• Title search fee and title insurance

A breakdown of the fees in the typical closing costs for sellers includes:

• Transfer taxes
• Title insurance
• Escrow fees
• Attorney fees
• Outstanding amount owed on the mortgage

Real Estate Expertise at Salmon Real Estate

Real estate transactions often can be confusing and overwhelming processes, but the team at Salmon Real Estate has got your back. We specialize in buying and selling a variety of property types on Staten Island, NY, acting as a guide for our clients and answering any questions they may have, such as who pays for closing costs.

Salmon Real Estate is one of the oldest independently owned real estate companies on Staten Island and has valuable experience and resources to help you buy or sell property. Contact us today to learn more about our Realtors and how we can help you acquire your dream home.